Why we are trapped in perpetual debt

Mabila Mathebula, Bheki Dlamini and Nyiko Nghatsane

Last week we woke up to the sad news that our former schoolmate, Tebogo Ludwick Mpai, was involved in a fatal car accident. He loved accounting with the debt of devotion.

After Matric, he went to the University of Limpopo to pursue a B.Com in Accounting. His natural appetite for accounting propelled him to enrol for a Post Graduate Diploma in Investment Management at RAU, (now University of Johannesburg) and an MBA from Wits University.

He played an important role in the South African corporate world as an executive manager, including Eskom. We never thought that one day we could meet after more than 40 years to wave our former schoolmate goodbye.

After he was laid to rest, it was time to reconnect with our former schoolmates, some are widowed, some are divorced, some have chronic illnesses and some live in abject poverty, some cannot put their heads above water because of perpetual debt.

We agree with an unknown author that: “The race is not always to the swift, but to those who keep running.”

The Comrades Marathon has opened for registration for next year and the organisers have indicated that 23 000 is the limit number of people allowed to register for this iconic race.

It is a distance of about 90km ran between Durban and Pietermaritzburg. Of the 23 000 athletes who will register, it is expected that the finishers will be around 17 000 if the previous statistics are anything to go by.

There are several reasons why some athletes do not finish the race. Some athletes lose sight of their goals and focus on other athletes. Simply put, they run other people’s race.

The running of other people’s race plays itself in life as well. It is one of the major causes of people getting deeper into debt daily. We allow other people to set trends for us and run their race and we do not finish the full distance.

Unfortunately, a race is like an argument that one cannot win, as there are many stakeholders that one is trying to please. Debt on the other hand is neither good nor bad, just as a gun on the table can neither be classified as bad nor good until it is put to some good use.

Let us illustrate this over a familiar ground, for example, a gun that was used to fend off the lion that was about to attack a person, could be said to have been functional, while the same gun, if used to murder a person, the act might be perceived to be dysfunctional.

It is true with debts as well. What are people normally using debt for? A debt aimed at financing a business or assisting a child’s education could be said to be a good debt. One could have borrowed the same amount from the same funder and used it for something else that even the borrower cannot remember.

To what extent have our socialisation scripted us into the habit of using debts to fund our flashy lifestyle? Remember the days when buying power was the buzzword? When some of us started working, we were inundated with shopping vouchers from retail stores impressing upon us that we had buying power.

Little did we realise that buying power had strings attached in the form of interest. It is unfortunate that in most cases, people take debts when under duress. This puts people in a position where they are unable to negotiate the terms of the loan.

Consumers believe that if they were to ask for terms and conditions, if they were to question some clause or to negotiate terms the issuer of the debt will withdraw the offer.

Consumers think of a loan when someone else is demanding the payment e.g. a university withholding the results of the learner and the parent being forced to go for a loan.

Instant gratification is at the root of most bad debts. One is unable to meet one’s monthly commitment and decides to add a burden on the same salary without expecting a rise in the salary nor without expecting some other income from somewhere else.

Is it possible for a person to have more than one mashonisa without being a liar? If one was truthful, one would have gone back to the same mashonisa/lender to borrow, but one go for a new one and lie.

People complain about how their income is swallowed by debts. This is a failure of the consumers to understand that no matter how much the salary gets increased, debts will grow to exceed the salary until they decide to act against the rise.

Author and life coach Mathebula has a PhD in Construction Management; Dlamini is a financial coach and former CFO; Nghatsane is a personal financial consultant

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